City council approves $1.1 million deficit budget

The Susanville City Council unanimously (4-0 vote) approved a budget with a $1.1 million deficit during its Wednesday, Aug. 4 meeting.

Mayor Mendy Schuster and councilmembers Kevin Stafford, Quincy McCourt and Thomas Herrera voted aye. Councilmember Brian Moore was absent.

McCourt praised City Administrator Dan Newton for the good work on the budget, but Newton said the credit should go to city staff instead. He said this year’s budget was very close to the one that was adopted last year that included a number of empty city positions.

Stafford said the city should find a way to curb some of its spending, and he noted this was the first time he had voted for a deficit budget.

The city anticipates general fund revenue of $5.5 million, expenses of $2.5 million, a transfer in of -$1.1 million and a transfer out of $4 million for a surplus of $155,946. The total budget anticipates revenue of $19.9 million, expenses of $20 million, a transfer in of -$7.3 million and a transfer out of $7.3 million for a deficit of $121,762.

Budget line items expected to be deficits include Flood/Emergency Declarations ($113,311), Public Safety Police ($267,043), Public Safety Fire ($34,501), State Cops ($14,156), Snow Removal ($549), Streets and Highways ($75,188), FEMA 2019 AFG Grant ($52,376), City Hall Parking Project ($13,848), Water System ($407,243), Johnstonville Water System ($7,785), Airport (157,607), Geothermal Utility ($70,867), Streets and Highways ($14,926), Risk Management Fund ($141,135), LAFCO ($17,000), Air Pollution ($72,053), and Air Pollution-Carl Moyer ($12,911).

According to the staff report, “The budget preparation methodology is consistent with past practice. Reliable revenues are used to cover operational expenses. Grants for equipment are net zero revenue vs. expenses. Out of area fire revenues are also net zeroed with expenses. The upside to this budget methodology is that it presents the financial position of the city in a conservative manner and exhibits that reliable revenues are not adequate to cover operating expenses.

“Increases in CalPERS costs, increases in staffing costs, and increases in materials and supplies will make it increasingly difficult to cover the deficit. Over the past few years, there have been major budgetary savings in salaries and benefits due to unfilled vacancies and one-time revenues such a grants. Despite the adoption of deficit budgets, the city has not finished a year negative. Last year, FY 19/20 after adopting a $570,000 General Fund Deficit, the General Fund finished positive (with) $80,000.”

 

Current budget policies, as amended Aug. 4, 2021

According to the staff report, “Staff is also presenting the budget policies for council consideration.

Under the proposed policy, external hiring of positions that are over 75 percent funded by general fund will cease until such time as the city administrator presents a service reduction plan for council’s consideration and approval. This plan will be developed with the input of city council, city staff and the public. Additionally, the budget policies have been revised such that the general fund transfers to Police 1009 and Fire 1010 will remain in those funds even if not completely expended.

  • Endeavor to adopt a balanced budget by June 30 of each year.
  • Endeavor to approve operating expenditures not to exceed operating revenues/fund transfers.
  • Approve and adopt the budget at the fund level, as opposed to line-item budget.
  • Review all fees and charges annually.
  • Whenever possible, fees and charges are set for each utility at a level that fully support direct and indirect costs.
  • All city-managed governmental and proprietary funds, with the exception of fiduciary funds (LAFCO, LCAPCD, etc.), are included in the budget.
  • Fund balances, in excess of the reserve requirement, may be used as a source of funds for non-recurring expenditures (one-time).
  • Endeavor to provide for adequate maintenance and replacement to equipment and buildings.
  • Establish vehicle/equipment replacement and facility maintenance fund.
  • Mid-year or more frequent reviews shall be done to take action to bring the budget into balance if adjustments are need in the course of a fiscal period.
  • Create and maintain reserves for all major funds (natural gas, water and streets).
  • The city will strive to maintain a general fund “cash flow” reserve equal to 20 percent of annual operating revenues.
  • A cash amount equivalent to the “cash flow” reserve will be kept in a separate fund and use of this reserve will require City Council approval.
  • Public Safety Police Fund: Funds transferred from Fund 1000 (general fund) to fund 1009 Public Safety Police Fund will remain in the Public Safety Police Fund even if there is a budget surplus at the end of the fiscal year.
  • Public Safety Fire Fund: Funds Transferred from Fund 1000 (general fund) to fund 1010 will remain in the Public Safety Fire Fund even if there is a budget surplus at the end of the fiscal year.
  • At fiscal year-end, a review of the enterprise funds (golf course and airport) will be performed and a budget amendment brought to the city council to authorize a transfer of cash from the General Fund to remove any negative cash balances before the year is closed out.
  • Maintain fiscal solvency (address cash flow concerns).
  • City administrator has discretion to move budget between departments within the General Fund (Fund 1000).
  • Department Heads may move budget among line items within a specific fund/department (with some restrictions).

 

Other actions

Other actions taken by the city council at its Aug. 4 meeting include unanimous approval of the council’s June 30 and July 7 minutes; unanimous approval of Resolution 21-5909, revising the city’s street projects; after nearly two hours of emotional comments on all sides regarding the restructuring the seats on the city council, the members agreed to take board training to resolve their issues; unanimous approval of Resolution No. 21-5902 authorizing investment in the Local Agency Investment Fund: unanimous approval of Resolution No. 21-5903 authorizing the city manager to establish bank accounts and acquiring banking services with US Bank; unanimous approval of Resolution No. 21-5905 regarding the natural gas transmission line capacity release; discussed new paint colors for the Memorial Park Skate Park; unanimous approval of resolution No. 21-5906 authorizing a contract for sales tax related services; unanimous approval of Resolution No 21-5907 approving the closure of South Gay Street for an evening market at Pancera Plaza for 2 to 9 p.m. Aug. 11, Sept. 15 and Oct. 20; and approval of sponsorship of the Aug. 28 Susanville Airfair.